PORK INDUSTRY

Mr PICCOLO (Light) (12:18): By leave, I move my motion in an amended form:

That this house—

1. Notes—

(a) the importance to continually improve animal husbandry practices to ensure the practical welfare of animals;

(b) the work being undertaken by the pork industry in Australia to phase out, as far is practical, the use of gestation stalls in the management of sows;

(c) the research being co-ordinated by the Pork Cooperative Research Centre (located at the Roseworthy Campus of the University of Adelaide) to ensure changes in sow and pig management are based on sound scientific evidence;

(d) that local pig producers acknowledge the participation of Woolworths in research to promote good animal husbandry practice;

(e) the unilateral decision made by Coles Supermarkets not to purchase pork from Australian farmers who have not completely phased out gestation stalls by 2014;

(f) the refusal by Coles Supermarkets to apply its decision to the producers and suppliers of imported pork; and

(g) the failure by Coles Supermarkets to properly consult with local pig producers.

2. Expresses its concern that the decision by Coles Supermarkets could have a significant negative impact on the Australian Pork Industry with no net benefit for animal welfare.

3. Calls on Coles Supermarkets—

(a) to apply the same welfare standard to all its pork products;

(b) to invest in research that will lead to improvement in animal husbandry practices;

(c) to work alongside the Australian pork industry to achieve better universal animal welfare outcomes without having a significant adverse impact on the industry; and

(d) to support rural and regional communities by investing in research that will improve animal husbandry practices and the productivity of the animal related industries.

I move this motion because it is a very important issue for not only rural Australia but also the whole country, since what happens in rural Australia impacts on the rest of the country as well. We have an integrated economy and society, so things that impact on our farmers ultimately impact on the townships in rural areas and on other parts of the economy and society. The very strong reason that I move this motion is that I do not believe this proposal is about animal welfare; it is really about market share. It is about big business actually increasing its profit margin and using animal welfare as a marketing tool to achieve that.

I will go briefly through the motion point by point. In terms of the first point about the importance of having in mind the welfare of animals, in our community there is a range of views from the animal rights people who think we should not eat meat at all to people who think we should be able to do what we like with animals.

Most of the community, I would say, would be in between there somewhere and would say that, if we are going to keep and eat animals, we should do it in a way that is as humane and as ethical as possible. That is what this motion is about: it says that we accept the reality that in our society we are going to eat meat and maintain animals but that we need to do it in a way which minimises harm to animals and which also is as ethical as possible. That is where this motion emanates from.

I think it is important that, if we make changes to the way we maintain and keep animals, we need to do it in a very practical sense so that, in other words, what we seek to do actually achieves the aim. Mr Acting Speaker, I am not sure that the time clock is right. I do not think I have spoken for 10 minutes already.

Mr Bignell: It seems like 20!

Mr PICCOLO: It seems like 20, does it?

The ACTING SPEAKER (Mr Pengilly): We will get that corrected, member for Light.

Mr Pederick: With such a presentation, time flies.

Mr PICCOLO: It does; it is such a lightning presentation, time has flown. The industry acknowledges that it has to change. There is nobody in the industry who does not acknowledge, and most farmers acknowledge, that the industry has to change the way we maintain and run our pork industry. That is not the issue. They are not standing still and saying that what we have done in the past is what we should do in the future. There is an acknowledgement that we have to change, but we need to change in a way that protects the industry and achieves the stated aim of actually improving animal welfare.

Industry is now working with people in universities and scientists to create a scientific way of achieving those changes. The changes have to be based on science because, to the untrained eye, when you actually go into a piggery, what is often seen as bad is not as bad as it looks. That is true of a lot of things. To the untrained eye, a lot of things look worse than they are and that is where our sort of foot-in-the-door journalists do most of their work. A lot of things that we do to manage animals are actually done for their own welfare, given that we actually do keep and maintain animals. So, we need to make sure that the changes are real, practical and support animal welfare in the long term.

It is also important that we do not drop productivity because, even though some people think it is a dirty word, productivity is a very positive word. We try to achieve as much as we can with the minimum amount of resources; it is actually a very sustainable concept. So, we need to make sure that what we do does not have an adverse impact on productivity, and any unilateral decision to change would do that.

So, we need, quite rightly, to invest money into research to make these changes. Let us not be under any illusion: changes are very expensive for farmers. It is not a case of just changing the internal configuration of a shed. They will need bigger sheds and a whole range of fencing. Some will be external, so there is a huge cost to farmers as well.

Importantly, one of the supporters of the scientific approach to the change is actually Woolworths. Woolworths, which is one of the biggest competitors in the marketplace, on this occasion is being a good corporate citizen and should be rewarded because it is actually prepared to put money into research to make sure that any changes are realistic, affordable and lead to long-term change.

The unilateral decision by Coles is all about profit and market share; it is not about animal welfare. In a letter to the Stock Journal on 19 August, the General Manager for Corporate Affairs for Coles Supermarkets actually says that. His very final sentence in that letter to the Journal states:

...the good news is that Coles' pork sales have surged since the announcement—the first positive growth in the category in a long time.

That is what this is about: it is about increasing market share for Coles. That in itself is not a bad thing if it actually achieves the desired effect, but it does not—and I will get to that in a second.

Coles' claim that this is about animal welfare is just a nonsense. Also, Coles' refusal to apply its decision to importers also underlines that fact because 70 per cent of pork from manufactured pork products is imported already. Coles suggesting that it is interested in supporting industry is quite a nonsense. In that same letter to the Stock Journal, the Coles General Manager also says:

Coles' decision to only purchase pork from producers who do not use sow stalls by 2014 was taken in the full confidence that Coles' producers, in SA and other states, were willing and could meet the farming requirements for this to occur.

Coles goes on to say:

Our discussions with pork producers were open and inclusive to what they and Coles could do in adapting to these changes.

Well, if you speak to some of the pork producers, that is just a nonsense. Excuse the pun, but Coles is really telling porkies here because, when you speak to the producers, you realise that they were told, 'This is it; you have no choice.' The producers cannot speak up because there are not many retailers and purchasers in the marketplace any more—we have a duopoly, almost, in this country when it comes to retail—and, as a result, the producers are not going to speak out to defend themselves. So, Coles has taken their silence to mean consent, which is clearly not the case.

What we could end up with is a decimated industry, where we end up importing all our pork products, with no net benefit to animal welfare across the globe. It would be a tragedy if a country such as ours, which has so many resources and able to feed its own people, ends up importing food. What this motion seeks to do is to ensure that we have a level playing field in this industry.

It is quite appropriate for this house to call upon Coles Supermarkets to apply the same welfare standard towards pork products. After all, I would have thought that a pig is a pig—it does not matter whether it lives in Australia, Europe or Asia, a pig is a pig. It is like saying that, somehow, we need some sort of pig racism—that our pigs are more important or superior to the pigs overseas. Coles is saying that it is interested in animal welfare, but it is not, and it just undermines Coles' argument.

It is important that we have serious consultation with industry, because they are prepared to adjust and that we work with them as well. As I said, this decision by Coles could wipe out the industry. Again, in its letter to the Stock Journal, Coles says, 'Coles only buys, and will continue to do so, fresh pork from Australian pork producers.' Well, at the moment, my understanding is that there is a ban on importing boned pork products.

So, it is not because Coles wants to do so, it is because it cannot. I can assure members that, if that ban was removed tomorrow, Coles would be importing more and more pork. So, I think it would be right to say that Coles' commitment to the pork industry is a load of tripe—I guess is the right thing to say. Again, Coles is quite happy to wipe out an industry for its market share.

I think it is about time that Coles not only supported our rural and regional communities by investing in research to improve animal husbandry practices but also protected the jobs of not only the farmers but those in the production and processing industry. As I have said, it is also important that Coles makes a genuine attempt to advance animal welfare. With those comments, I seek the support of the house for the motion.

Mr PEDERICK (Hammond) (12:29): I wish to move an amendment to the motion as follows:

To add the following paragraph to the motion:

4. Calls on the federal government for full and prompt national implementation of the Model Code of Practice for the Welfare of Animals—Pigs, as approved by the Primary Industries Ministerial Council on 20 April 2007.

It is not often in this place that I agree with the member for Light. There must be some love or something else in the air today. This motion recognises the true importance of animal welfare across the globe, and not trying to pick a sector, state or country above another is absolutely the right move.

I would like to discuss what Coles has done here. They have made an announcement that by 2014 they will stop buying fresh pork from producers who use sow stalls, and their ban will not apply to processed pork products, such as ham and bacon imported from overseas. Certainly, South Australian producers believe this will place them in an uncompetitive position and jeopardise the Australian pig industry. It is common knowledge that pregnant sows are placed in sow stalls to prevent them fighting each other, which is a natural tendency that often results in abortion and, therefore, lost production.

It is also worth noting that farrowing crates are used in the pig industry—for the survival of piglets, mainly, because, if they are not used, they run a high risk of death and very low litter rates in the breeding of pigs. The industry is telling us that up to 80 per cent of ham and bacon consumed in Australia is imported, much of it from Denmark, Canada and the United States, where gestation stalls exist and producers also enjoy subsidised farming systems.

Coles makes the grand claim that this move is motivated by animal welfare concerns. They decline to disclose how much pork they import and claim double-digit sales growth since the announcement. I agree with the member for Light that this is about perception and people feeling good when buying pork products from Coles, when most of it is imported product when Coles can get hold of it. The only reason they might not be purchasing it at present is that there is a ban, and I agree that as soon as that ban is lifted they will be straight back in the market bringing in imported product.

Coles also makes the claim that their decision followed consultation with South Australian pig farmers who, they say, supported the move. The problem is that Australian fresh pork producers will incur considerably greater production costs through increased infrastructure costs or through foetus losses if this move is brought forward by Coles without being brought forward across not just this state but also across this country and internationally.

Australian Pork Limited estimates that Australian farmers could pay between $400 to $900 per sow to phase out sow stalls. Most pig farmers support the general intent behind the decision and would accept it if it applied to all pork products sold in Australia, imported or locally grown. They object to being forced to adopt practices that will make them uncompetitive against overseas producers. Coles' consultation has been a little like Labor's and has been described as more like, 'This is how it's going to be,' and no real choice was offered. There is very little export of Australian pork. Other countries who export do not, in the main, import products that they produce.

Some countries that claim not to use sow stalls actually use them for four to six weeks through the most critical period of a sow's pregnancy rather than risk production levels. They are seen to be doing the right thing, but only up to a point. This is the other point about deception that I mentioned earlier. It is felt that most Australian producers would happily adopt this practice.

While Coles claims that animal welfare is the driver of this decision, it appears more commercial than altruistic. The move is seen by many as an attempt to catch up to Woollies, which grabbed a niche market share months before with a similar demand on some growers. If Coles were truly concerned about animal welfare it would acknowledge that all pork-based smallgoods are made from fresh pork wherever it is grown, whether it is pigs from Denmark, USA or Canada (from where almost all our pork imports emanate), and should be entitled to the same consideration, in which case Coles should apply the same demands on processed pork imports. It would certainly be ironic if we had to finish up trying to import fresh pork from countries using sow stalls.

It is interesting to note that in April 2006 the Primary Industries Ministerial Council endorsed a revised Model Code of Practice for the Welfare of Animals—Pigs, which was developed by a panel of experts including industry, government, animal welfare groups and the RSPCA and was acceptable to all. Changes were to be phased in over three, five and 10 years from then. South Australia adopted the code immediately but not all states followed suit. As a consequence, not all South Australian producers have embraced the changes or the timetable because they need to wait until all other states implement the same code, otherwise South Australian producers will be at a competitive disadvantage not only with internationally grown pork but with pork grown in other states. That is why I have moved the amendment.

Given that industry guidelines exist within this code, it is necessary for the federal government to insist on all states adopting the code promptly. This requirement for national adoption would be a far more reasonable and effective broad solution than using the blunt instrument of retailer imposed discriminatory bans. All growers are just asking for a level farmyard or playing field. The vast majority of farmers, whether farming pigs, sheep, cattle or other livestock, do the right thing, but there is always the odd one that does not. Certainly in the pig industry hygiene is absolutely paramount in order to prevent disease, and the care of sows is paramount so that they get optimal litter size.

I note also the expansion of using eco-shelters, where many pigs can be kept in units and have free-range to move around to their feed, water and sleeping shelters. People are making the right moves, but we need to do this not just in this state but right across the country and across the world. This is all about perception. Putting a ban on one group of farmers, crippling our own local farmers, to make it look like you are doing the right thing is completely wrong. In closing my remarks, I note the motion from the member for Light. The Liberal Party will support the amended motion and I seek the support of the house.

Mr PEGLER (Mount Gambier) (12:39): I do not support the motion as it does not address the major issues facing the pork industry. The discussions before us on the pig industry and Coles need to be tempered with fact. The Australian government signed a peace agreement with the EU (along with other nations) and agreed to accept subsidised agriculture imports in exchange for the EU retaining membership of the WTO. Consequently, we are importing pork middles from Denmark to manufacture bacon.

Paul Keating negotiated an Australian export beef deal with Canada, which agreed to reciprocal trade of Canadian pork imports into Australia. Boneless pork legs are now imported for ham and smallgoods manufacture from that country. The Australian government signed the USA Free Trade Agreement. This agreement accepted USA boneless pork leg meat imports into Australia as a reciprocal trade. A trade battle emerged between Canada and the USA to supply boneless leg meat into Australia, and we now find (in October 2010) imports quoted at $2.58 a kilo being landed in Melbourne.

The OECD's agricultural policies 2010 producer support estimates show that Australian producers receive around 3 per cent; USA producers, 12 per cent; Canada, 18 per cent; and the OECD, 22 per cent. Australia cannot compete on price because the playing fields are not level. We have free trade in this country, but it seems to mean that our producers do it for free and all the other countries manage to trade with us.

From 2002 to 2007, Australian processors manipulated oversupply with imports. In 2007-08, the Australian pig industry had market gross oversupply as Australian processors greatly escalated imports to replace Australian pig meat used for ham and bacon because imported meat was so cheap. All Australian processors were forced to use imported meat so they could be market competitive on price with those using imported meat.

The Australian pig industry comprised 320,000 breeding sows at the beginning of this period, but due to extreme financial losses had reduced that number to 250,000 sows by the end of 2008. A total of 25 per cent of the industry had gone, leaving millions of dollars of infrastructure unused—empty piggeries were everywhere. The industry was to face a massive restructure as the ham and bacon processing market had shifted to imports. The remaining pork producers were focused on supplying the fresh meat market.

In 2008-09 the exit was so great that market undersupply prevailed for fresh pork, pushing prices to $3.60 a kilo for hot standard carcass weight. Also, 18 months of high prices and cheap grain delivered profits. Many producers restocked empty piggeries as the temptation was too great. We now find that in 2010 there is a market oversupply in the fresh meat pork market and prices have crashed to $2.40 a kilo.

Producers selling at under cost of production with a grain price escalation in August of 30 per cent will see another exit from the pig industry to restore the supply/demand balance. We must bear in mind that Coles and Woolworths account for about 80 per cent of the retail food trade in this country, so they are the major players. Coles Supermarkets and their stock suppliers of 10,000 pigs per week to meet their needs are fully aware of the risks associated with exotic disease outbreaks in Australia; those diseases being post-weaning multisystemic wasting syndrome and porcine reproductive and respiratory syndrome. These diseases are epidemic in all other countries in the world, and if they ever get into this country, we will see that those barriers cannot be used against those other countries.

Australia is the only nation that is free of these two viral diseases that have devastated the world. While we maintain this status, Biosecurity Australia is forced to allow pig meat into Australia for cooking and processing only. If we break with these diseases, fresh meat will flood into Australia at prices under our cost of production and decimate the Australian pig industry. Coles and its Coles stock producers believe we must start now to create a branded premium natural product that delivers excellence in sensoric eating qualities and builds an image of clean, fresh and safe. Coles has started the image of its meat by banning growth hormones from all Coles' cattle. It is imminent this will follow into its premium pork brand.

Consultation on stall free as part of brand with all Coles producers has taken place. Contracts and market premiums for supply of stall-free pork are currently being negotiated and supply will commence in 2011. Coles politically had to hold its cards close to its chest on stall free to win the battle of first supermarket to announce welfare accredited pork. The rubbish and propaganda that has followed Coles' announcement is unbelievable. Coles' announcement will have no impact on the survival of Australian producers short term. The many producers exiting is inevitable due to the oversupply from imported products.

Australian pigs taking back significant market share for the processor market from imports is a dream. The reality of price will not see this happen again. The only way we can ever compete with these overseas importers is to have a superior product. Coles and its producer-suppliers need to be allowed to fulfil their visions of building a branded pork label that may allow competitiveness against fresh pork imports when it does happen.

They have been working together (that is, the producers and Coles) on the genetics and their farming practices so they can produce a superior product. In the genetics you work on sheer factors such as where the meat will cut the best and be the most tender and juicy, and, of course, farming practices also take that into consideration. The producers and Coles have been working together to come up with a superior product to be branded under this label.

Every country in the world has supermarkets driving change as they build brands for competitiveness. I think we must bear in mind that Coles has been working with its producers to come up with a brand of product and it was those producers who agreed with the sow stall situation, so I will be voting against this motion.

The Hon. R.B. SUCH (Fisher) (12:48): This motion by the member for Light raises a whole lot of issues. It is not unusual to hear people being critical of Coles and, at other times (although not in this motion), Woolworths. By implication, there is an inference that the other supermarkets are somehow more noble or worthy, but, in actual fact, Metcash, which supplies Foodland IGA, is a South African multinational and also supplies most of the service stations—and you see what sort of prices you pay there for—

Mr Pengilly: No, I don't, because I don't buy anything there.

The Hon. R.B. SUCH: Well, a lot of people do. They have been criticised by the ACCC for their behaviour. As a general point, when people are focusing on supermarkets and the rights and wrongs, I think they should apply the same standards. I do not know whether members caught up with the news this morning that Australia is now a net importer of processed food. We do not produce our manufactured food. If you go into a supermarket, as I am prone to do at times, you find that a lot of things are coming from all over the world.

That is not necessarily a bad thing if it is a level playing field, as the member for Mount Gambier said. The reality is that it is not a level playing field, but I think Australians want to be very careful that they do not put themselves in a position where, despite what should be a land of abundance, we do not generate our own food.

The issue of animal welfare, which this matter of pork production fits into, is a huge area and anyone who disregards what is happening in the community among consumers would be very foolish indeed. It is obvious that Coles have read the signals coming from consumers. The consumers generally do not want any product that has resulted from any practice that has involved animal cruelty.

I was talking to one of the senior Coles managers the other day, and he said that their sales of pork have doubled even though they have not brought in this new system, but the perception is out there that Coles are concerned about animal welfare—in particular, in this case, pork production. Their sales have doubled and they have not even implemented this new approach. It shows you the effect of people believing that animal welfare is being considered.

Putting it in the broader context, we have a con in relation to free-range eggs—not by all producers, obviously. There was a study done showing that the numbers mathematically did not add up in terms of those claiming to be free-range egg producers and what was actually produced. It is the same with free-range chicken. I know from my local chicken shop at the Hub when they switched to free-range and put the price up, their sales boomed because people will pay extra if they believe there is no cruelty involved.

We know that with the free-range chicken industry there is a lot of smoke and mirrors there, not actually in the pens or sheds, but some of these big producers have giant sheds with tens of thousands of so-called chickens in them who have a little exit trapdoor where they can go out and have a look at the view occasionally. There are genuine free-range producers; we have many excellent ones here in South Australia. But we still do not really have a tight system of accreditation.

Compared with many places in the world, our animal welfare standards are a lot higher. I remember going to Japan once and I went to a dinner there. They said they would be serving fish. The fish was actually alive but it had the flesh taken off it. It was in the centre of the table packed in ice, still breathing (or whatever fish do), which put me off my fish dish a little. We have in the Middle East—and it is practised here—halal slaughter of animals where they do not even stun the animal, they just cut the throat and let the animal bleed to death, because apparently somewhere in the Bible it suggested that that be done.

So we have a lot of hypocrisy and double standards and a lot of carry-on where there is animal cruelty practised. One of the ironies is that we have gone more and more into factory farming when, of any place on earth, we are one of those where you would think we would be moving, as they would like to in Europe, towards a free-range-type production. There are arguments for and against free-range. You have issues of predation and so on, but the trend, if you look around areas like Murray Bridge, is towards intensive farming. That, I assume, will continue.

In terms of the pork industry, Coles has told me that all of their fresh pork is local. One would expect it would be if it is fresh, it would not be too fresh if it had been on a boat for a month or two. They have told me that all of their pork, 100 per cent, is Australian and it is fresh. What is imported is the processed pork, as the member for Mount Gambier has pointed out. This motion says that Coles should apply the same standard in relation to sow stalls and other measures on the imported product. I can understand the logic of that call. It is not easy to achieve, obviously, because those producers are outside this country.

I remind members that there are a lot of great local producers who are producing bacon and other smallgoods from local fresh pork. There is one in the electorate of the member for Kavel, the Kanmantoo Bacon Company. They use local fresh pork, it is all smoked locally, and you do not have to buy imported 'crap' (to use the scientific term). You can buy the local quality smallgoods that are produced from fresh Australian pork. There is choice out there for some people, but this issue has a long way to go.

I can understand the logic of keeping sow stalls, but, as Coles has recognised, there is consumer demand for changing what may be seen as a practice that is cruel to animals but which is designed to protect the litter from being crushed by the sow, and I can understand that. It is important that we debate this measure—and so that we can vote, I will limit my remarks—but this motion has a way to go in terms of the implications contained therein.

Mr PICCOLO (Light) (12:56): I do not disagree with what the member for Mount Gambier has said, but it is important to remember that this decision by Coles in no way helps to create a level playing field; it actually does the reverse. That is the important thing: it does not help create a level playing field. We have some of the most efficient farmers in the world and yet all this decision does is punish them further. If Coles wants to have a range of products, which is understandable, it can still differentiate products without making it compulsory for producers to do it immediately. Coles has the capacity to do that. This is really an abuse of market power. Coles is using its market power to ensure that the farmer does what it says.

In summary, we need to take a thoughtful and balanced approach to ensure that we achieve actual benefits in animal welfare and minimise losses to the industry, which could contribute significantly to the decline in our rural areas and regions.

Amendment carried; motion as amended carried.

[Sitting suspended from 12:57 to 14:00]